The nation’s premier taxpayer watchdog group, Citizens Against
Government Waste (CAGW), today applauded President Obama for announcing
that he will use private sector auditors to root out fraud in the
country’s two massive government-run healthcare plans, Medicare and
Medicaid. The practice of using private sector auditors to identify and
recover improper overpayments to healthcare contractors and providers,
technically called recovery audit contractors (RACs), has been a staple
in the private sector for many years.
“Recovery auditing has been a critical tool in the government’s
anti-waste arsenal for several years”
The Office of Management and Budget (OMB) reported
on November 18, 2009 that federal improper payments across the board
totaled $98 billion in fiscal year (FY) 2009, an increase of 38 percent
over the $72 billion in FY 2008. Medicare and Medicaid accounted for $54
billion in improper payments. Even though a limited three-state Medicare
RAC demonstration project implemented by the Centers for Medicare and
Medicaid Services (CMS) between 2005 and 2008 initially encountered
stiff resistance from hospital associations, some providers, and some members
of Congress, the program was nonetheless rolled out nationwide by
January, 2010.
Federal agencies such as the Defense Department have used RACs to
recover as many overpayments as possible, with the individual company
(in accordance with standard industry practice) retaining a percentage
of funds recovered as payment. CAGW has vigorously
supported
the use of RACs.